Trade will recover to pre-pandemic levels quicker than the recovery after the financial crisis of 2008 which lasted 26 months, according to a survey of 800 senior executives involved in international trade decisions and transactions.
The study, commissioned by DP World and conducted by the Economist Intelligence Unit (EIU), found that 70% of businesses predict widespread optimism for trade bouncing back in the wake of coronavirus.
Nearly a third of those surveyed thought the recovery would be twice as fast, with trade returned to pre-pandemic levels within a year.
The data also showed that the pandemic has brought lasting change to the way companies do business. Some 83% of executives indicated that they are in the process of reconfiguring their supply chains by switching or adding new suppliers, using different logistics providers; and/or changing production or purchasing locations.
The ‘Trade in Transition’ research is based on two surveys. The first survey of 3,000 respondents was conducted between January and March 2020. The second survey, of 800 respondents, was conducted between October and November 2020 and asked executives across a range of industries and regions about the pandemic’s effects on trade and their business—including changes in their international sales revenue in the first half of 2020 compared to 2019.
The data outlines how the effects of the pandemic have accelerated the transformation of supply chains and prompted rapid adaptation to ensure resiliency in international trade.
DP World, operator of Cyprus’ main commercial and passenger port concession DP World Limassol, said that in early 2021 will release a series of papers that dive deeper into results from both surveys, highlighting significant sectoral and regional findings.
In April 2016, DP World Limassol was awarded a 25-year concession to exclusively operate the multi-purpose terminal in Limassol, including three multi-purpose quays.
Redefining how world stays connected
“The impact of the COVID-19 pandemic has redefined how the world stays connected, and companies conduct business as a powerful impetus for innovation,” said Sultan Ahmed Bin Sulayem, CEO and Chairman of DP World.
“The effects of the pandemic have accelerated the transformation of the supply chains and prompted rapid adaptation to ensure resiliency in international trade. The global business community has risen to the challenge, and taken strong and decisive action to make supply chains more robust and agile – the benefits of which will be reaped in future years.”
The DP World survey said that “during the early stages of the pandemic, shutdowns and disruption to production exposed vulnerabilities such as over-dependency on single geographies and a lack of transparency on the movement of cargo.”
Yet despite the widespread economic impact of the pandemic, 42% of survey respondents stated that their firm’s international revenues expanded in the first half of 2020, while 19% reported no change from the previous year. These figures are encouraging at a time when only one of the world’s major economies, China, is registering economic growth.
The study also found that only 8% of businesses believe that recovery to pre-pandemic levels will take more than five years, and fewer than 2% believe trade will never recover.
On average, firms said they are reallocating a third of their revenue from the first half of 2020 to remodelling their supply chains, and a fifth said they will spend more than 50% of H1 revenues
The survey concluded that 65% of respondents said the reconfiguration process would be complete within a year – no easy task given the intricacies involved in changing supply chains.
The full executive summary can be accessed here.